Date: Jul 07TH, 2022

Why Coordination Between Your Tax Professional and Your Financial Planner is Critical

If you’re like many Americans, you may employ a certified public accountant (CPA) to do your taxes. At the same time, you may use a financial advisor to maintain your investments or plan your retirement. But do these two people ever communicate except for a brief time during tax season? If not, you may be missing some economic opportunities.

Maximize Your Financial Health

It’s not uncommon for accountants and finance/investment professionals to operate separately, and even parallel one another. Experts recommend, however, that your accountant and your investment firm should be working together to maximize your financial health and build the best possible estate plan for your circumstances.

In a recent article for Forbes, Charlene Wehring noted that the tax landscape is ever-changing, and new COVID-19 relief funds have also entered the conversation. For this reason, it’s important that your tax and finance professionals work together regularly to maximize savings for you given current rules and circumstances.

“Taking a comprehensive view of your financial plan is a more strategic approach to growing wealth,” wrote Wehring. “Minimizing tax from capital gains is a critical time for CPAs and financial advisors to collaborate as changes made in your investment portfolio can have tax consequences — or benefits. If your financial advisor lacks tax knowledge, you could end up paying more than necessary. However, a strategy known as tax-loss harvesting can combat unnecessary taxation on your investment portfolio by selling investments at a loss to shrink taxable income resulting from the profitable sale of an investment.”

Some of the ways that you can benefit from your accountant and financial advisor working together include:

  • Minimizing your capital gains tax;
  • Identifying missed opportunities on your tax return; and
  • Increasing the tax efficiency of your estate plan.

Wehring noted that tax-efficient estate planning is even more important if you own a business or significant real estate.

“Your financial advisor can serve as an objective third party to communicate plans to other parties, answer questions and mitigate risks of your wealth continuing on for future generations,” she wrote. “They can advise on gifting strategies and special tax benefits before your passing and routinely remind you to keep beneficiaries up to date. With the tax landscape subject to change in the next year, your financial team should be formulating a plan for the gift tax exemptions set to sunset in 2025.”

Financial Planning Advice

Good financial planners should coordinate with your tax professionals regularly to maximize your portfolio, minimize your taxes, and choose the best estate planning options. Look for a financial services firm that will coordinate all elements of your financial health.

Learn how Arizona-based Prime Wealth Advisors’ full-service retirement planning, tax, estate, and wealth management can help you ensure you maximize your financial position. Call 623.77.PRIME for more information.